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WATER ENVIRONMENTAL POLLUTION AND STATE OF THE ART TREATMENT TECHNOLOGIES

Industrial water pollution and transboundary eco-compensation: analyzing the case of Songhua River Basin, China Li Wanhong 1 & Liu Fang 1 & Wang Fan 1 & Ding Maiqi 2 & Liu Tiansen 1 Received: 11 June 2019 / Accepted: 2 December 2019 # Springer-Verlag GmbH Germany, part of Springer Nature 2019

Abstract As eco-compensation is considered an effective economic instrument for controlling the industrial water pollution in transboundary basin, this study aims to explore a transboundary eco-compensation mechanism for Songhua River Basin that is one of the seven major drainage basins in China. Using a panel dataset of eleven cities in this basin tracked from 1992 to 2016, we empirically examined the environmental Kuznets curve (EKC) hypothesis by analyzing the relationship between economic development and industrial water pollution. Then, we developed two econometric models to quantify the wastewater discharge allowance and eco-compensation of investigated cities, respectively. The results specifically reveal the inverted U-curve effects of GRP (gross regional product) on industrial wastewater discharge, which displays an evidence of EKC in the field of transboundary water pollution in China. Moreover, our results verify the polluter pays principle that polluter should be responsible for its pollution behavior through paying of eco-compensation. Our results further interpret that the emissions trading program can help protect the ecosystem by allowing the wastewater discharge allowance to trading market. Keywords Industrial water pollution . Transboundary eco-compensation . Environmental Kuznets curve . Polluter pays principle . Emissions trading program . Wastewater discharge allowance

Introduction Previous decades have witnessed a rapid economic growth in developing countries. However, as the extensive economic growth by excessively investing in industrial sectors that guzzle energy and spew out water pollution, industrial water pollution is regarded as a key prevalent ecosystem quality challenge in countries with developing economics (Zhai et al. 2019). According to the information released by United Nations World Water Development Report 2018, an estimated 80% of all industrial and municipal wastewater is discharged to the natural

Responsible editor: Eyup Dogan * Liu Fang [email protected] 1

School of Economics and Management, Harbin Engineering University, Harbin 150001, China

2

Department of Economics, University of Wisconsin-Madison, Madison, WI 53706, USA

environment without any prior treatment, which results in a growing deterioration of overall water quality with detrimental impacts on human health and ecosystems (Lesley et al. 2019; Michelle et al. 2019). More importantly, as the lack of effective eco-compensation mechanism, the conflicts between the protection of transboundary water resource and economic development have become more severe. Accordingly, the impact of industrial water pollution on the ecosystem is of increasin